Greenspan: Fiscal policy still a poor stimulus tool

WilliamL. Watts

Federal Reserve Chairman Alan Greenspan told House lawmakers he remains skeptical of the government's ability to use fiscal policy to stimulate the economy. "It's very difficult to fine-tune fiscal policy for short term stimulus purposes and I've tended to be very supportive of the employment of fiscal policy for long term structural growth issues and leave monetary policy to be applied in the short run," Greenspan said. President Bush has touted his $726 billion tax package as both a long-term growth aid and as a key to boosting the economy and job creation in the short run. The Fed still has room to cut interest rates "if we choose to move and we decide that stimulus is required ... I still have not changed my view about what the appropriate balance is," Greenspan said.

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